What Is an RTL Loan?
An RTL loan, short for residential transition loan, is a short-term, business-purpose loan for an investor who is moving a residential property from one state to another: buying a house to renovate and sell, bridging to a long-term rental loan, or building a new home from the ground up. RTL is the umbrella term lenders and capital markets use for fix-and-flip, bridge and residential construction loans. The property is in transition, so the loan is too.
What Counts as an RTL Loan
Three loan types usually sit under the RTL label: (1) Fix-and-flip loans, which fund the purchase and renovation of an investor-owned home that will be sold or refinanced; (2) Bridge loans, which carry a residential investment property for a short period until it is sold or refinanced into long-term debt; (3) Ground-up construction loans, which fund new residential builds such as single-family homes, townhomes and small multifamily. What they share is a short term, interest-only payments, and an exit by sale or refinance rather than years of amortization.
How RTL Loans Are Sized
RTL loans are sized to the project, not to the borrower's personal income. Lenders look at loan-to-cost (the loan against purchase plus renovation or construction cost), loan-to-ARV (the loan against the after-repair or completed value) and the sponsor's track record. At Riverside Park Capital, fix-and-flip loans go up to $5,000,000 with 12-24 month terms, and ground-up construction loans go up to $5,000,000 with 12-36 month terms, each with a 680 minimum FICO. Flip leverage is sized on cost and after-repair value and construction leverage on total project cost, both confirmed per deal. Renovation and construction money is released in draws after an inspection confirms the work.
RTL vs. DSCR Loans
An RTL loan covers the transition; a DSCR loan covers the hold. Once a renovated or newly built rental is leased, many investors refinance the RTL loan into a 30-year DSCR loan that qualifies on the property's rent instead of personal income. Planning that exit before closing the RTL loan helps make sure the finished property will appraise and cash-flow well enough for the refinance.
Why the Term RTL Comes Up
Borrowers rarely search for "RTL"; lenders, loan buyers and investors in loan pools use it. Many RTL loans are sold after closing to institutional buyers or pooled into RTL securitizations, so the label describes a recognized asset class with its own underwriting norms. For a borrower, the practical question is simpler: is the project short-term, and will it end in a sale or a refinance? If so, it is RTL financing.
Frequently Asked Questions
Related Loan Program
Fix & Flip Loans
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